Insotec is a leading microfinance NGO in Ecuador to improve access to financial services for underserved microentrepreneurs.

Insotec is a leading microfinance NGO in Ecuador to improve access to financial services for underserved microentrepreneurs.

Key details

Social - Financial inclusion
Private credit - Direct investment

Key metrics

Investment date
July 2022
Target SDGs
No poverty (SDG 1), Zero hunger (SDG 2), Decent work & economic growth (SDG 8)
Impact KPIs
Clients served, Female and rural clients serve, Smallholder farmers served, Share of portfolio related to agriculture investments

In Ecuador, micro, small, and medium-sized enterprises (MSMEs) account for over 90% of jobs, yet they receive only about 12% of formal credits. Financial exclusion is particularly acute in poor rural areas where poverty affects c. 40% of the population, which is three times higher than urban poverty. Furthermore, more than 60% of the active rural population is dedicated to the agricultural sector, representing the backbone of these communities. Farmers in rural areas often have very limited access to loans and will rely on short-term, high-premium loans to purchase supplies, commonly known as ‘chulcos’.

The un- and underbanked are unable to take advantage of basic economic tools such as savings, credit, money transfers or insurance. This leaves them vulnerable to shocks such as job loss or unsuccessful harvests. Access to financial services enables them to protect their families, hedge against risks, and invest in their future.

Founded in 1980, Insotec provides financial services, technical assistance, and advisory services to microentrepreneurs in Ecuador. It has a strong focus on rural areas and the agriculture sector (around 40% of its customers work in this sector and 70% are in rural areas). The company also has a strong focus on women, who make up 50% of its client base.

With the provision of affordable, transparent, and appropriately structured financing to microentrepreneurs and rural smallholder farmers, Insotec is well positioned to contribute to curbing poverty in the country. In addition to its core financial inclusion mission, the institution also offers a wide range of services designed to improve the quality of life of the communities it reaches. Such services include technical assistance for farmers and access to affordable health services for beneficiaries and their dependents.

Insotec has established a network of suppliers, offering their clients access to affordable lines of credit which can be used to purchase agricultural inputs and supplies in-store. By doing this, Insotec can ensure that the funds are being invested directly into improving a business’s operations. Lastly, Insotec’s loan officers cover a wide geographic area: “The private banks are not in rural areas; our loan officers travel up to two hours from a branch, so that’s the kind of gap we cover,” Carlos Andrés Holguín, CEO of Insotec, explains.

INSOTEC’s focus on financial inclusion, technical assistance and affordable healthcare has helped promote economic development in rural areas and improve the lives of their clients. They have been able to reach close to 29,000 clients, of which half are women, and with an uptake of healthcare insurance of 98% across their clients. The company also directly supports close to 600 jobs.

Insotec’s partnership with BlueEarth is based on the fact that both share similar values and impact intentionality. BlueEarth provided credit financing at a transformational time, just as Insotec looked to evolve into a regulated bank. Insotec also sees the partnership as an opportunity to develop projects with a climate impact, and the company is keen to develop their in-house skills on the environmental and climate side, to better serve their clients.

Furthermore, Blue Earth Capital supports Insotec in governance matters, ensuring that best practices are implemented and followed.